•  
• Tweet
•  
•        Print
•  
•         Track Keywords
•  
• 

From the Opalesque team:

As the fund of funds portion of the industry looks to change its image after the disappointing performance and liquidity issues of 2008 and early 2009, one of the potential models that have been suggested is the proprietary desk trade model of investing into managers. In October, Opalesque spoke with managing partner at hedge fund firm MACM LLC and author Monty Agarwal who wrote about this approach in his book "The Future of Hedge Fund Investing: A Regulatory and Structural Solution for a Fallen Industry".

"The current model for funds of hedge funds is a very backwards-looking, statistical approach," Agarwal explained to Opalesque. "They are looking back at the hedge fund's historical returns, run statistical models and based on that they decide, this is the fund we want to invest in. It is paramount for FoHFs to understand the process that hedge funds use in generating returns."

Fund of funds in other strategies may want to look to the managed futures industry for examples of this approach.

Established firms such as Efficient Capital have long used this type of dynamic investment model. “We view ourselves principally as a trading firm, not as a fund-of-funds,” CEO, President and Founder Ernest Jaffarian said during the latest ......................

To view our full article Click here